Correlation Between Glg Intl and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Glg Intl and Wells Fargo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Glg Intl and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glg Intl Small and Wells Fargo Large, you can compare the effects of market volatilities on Glg Intl and Wells Fargo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Glg Intl with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Wells Fargo.
Diversification Opportunities for Glg Intl and Wells Fargo
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Glg and Wells is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Wells Fargo Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Large and Glg Intl is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Glg Intl Small are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Large has no effect on the direction of Glg Intl i.e., Glg Intl and Wells Fargo go up and down completely randomly.
Pair Corralation between Glg Intl and Wells Fargo
Assuming the 90 days horizon Glg Intl Small is expected to generate 0.77 times more return on investment than Wells Fargo. However, Glg Intl Small is 1.3 times less risky than Wells Fargo. It trades about 0.08 of its potential returns per unit of risk. Wells Fargo Large is currently generating about 0.05 per unit of risk. If you would invest 6,656 in Glg Intl Small on September 12, 2024 and sell it today you would earn a total of 2,004 from holding Glg Intl Small or generate 30.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glg Intl Small vs. Wells Fargo Large
Performance |
| Timeline |
| Glg Intl Small |
| Wells Fargo Large |
Glg Intl and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glg Intl and Wells Fargo
The main advantage of trading using opposite Glg Intl and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl position performs unexpectedly, Wells Fargo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Glg Intl vs. Western Asset High | Glg Intl vs. Ppm High Yield | Glg Intl vs. Artisan High Income | Glg Intl vs. Metropolitan West High |
| Wells Fargo vs. Glg Intl Small | Wells Fargo vs. Ab Small Cap | Wells Fargo vs. Siit Small Mid | Wells Fargo vs. Ab Small Cap |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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